Gundlach: Well, the bond market is rallying because the Fed has reacted to the seizure in the corporate bond market, which is not getting enough attention.
I mean the junk bond market [spreads] widened about the same as it did in fourth-quarter 2018, and its widening out massively again today, and Jay Powell has a background not as a theoretical economist, but as a private equity person, and his actions on short rates have been pretty much in reaction to, ever since he started the easing cycle, pretty much in reaction to problems in the corporate bond market, which are really worth paying attention to.
The stock market has benefited a lot from buybacks and as the corporate bond market is weakening - it's over a $10 trillion milestone amazingly $10 trillion of corporate bonds.
Corporate bond yields are going up just as rapidly as treasury rates are falling, its kind of problematic for the buyback aspect of the market.
The Fed has cut rates by 50 basis points intra-meeting panic emergency cut, in reaction to even the investment grade bond market being shut down for seven business days.
And so if you look at history once the fed does a panic intermeeting great cut particularly when it’s 50 basis points which is usually what it is when you have to panic, they typically cut pretty quickly again even at the very next meeting.
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